In democratic regulated capitalism, it takes a compromise of market-side (bubble-up) and supply-side (trickle-down) economics to create a viable economic system. Putting more money in the hands of people (especially in the lower 50 percent economically who spend a large percentage of their income on consumer goods) stimulates the economy by increasing consumer buying.

This latter procedure can be accomplished through graduated taxes, which supply money for nominally-priced welfare services such as public education, medical care and legal assistance. In addition to these services paid for by taxes, the rank and file need to receive adequate minimum wages and salaries, unemployment compensation and retirement benefits to be able to purchase the output of the privately owned production facilities.

On the other hand, there must be sufficient money in the hands of corporations and entrepreneurs to invest in businesses and for industry to produce consumer goods and create more jobs with a reasonable profit. However, there must not be more productive capacity than there are funds to buy the goods, or the business owners would lose money.

Those who emphasize the scenario in which the rank and file have adequate funds to purchase the plant output are referred to as market-side economists, while those who are more concerned that the business people have sufficient funds to produce the goods are labeled as supply-side economists.

The truth is there must be a compromise between these two positions, and this agreement must not be paid for with borrowed money, which results in a legacy of debt for succeeding generations.

This economic debate that is never ending has been continued largely in the United States by the Democratic and Republican parties. The Democratic Party majority tends to feel that the rank and file are being economically exploited by the entrepreneurs and corporations, and the Republican Party majority tends to believe that taking money from the richer people in taxes and minimum wages set by the government is a redistribution of wealth, which they strongly resent.

These opposing positions make it clear why compromise is so difficult. However, the only alternatives to this democratic regulated capitalism is either democratic socialism, which would probably result in a loss of incentive and even greater bureaucracy, or to a democratic laissez-faire capitalism, which history shows results in greater “booms and busts,” increased inhumanity to a large part of the economically challenged, and the potential for uprisings.

Hopefully, the continuing compromise between market-side and supply-side economics will not only be fair to the present and future generations but also to the environment and to the equitable working and living conditions of the people as a whole.

Kenneth R. Walker, Ph.D., is Professor Emeritus of History at Arkansas Tech University.